AREIT leans harder into malls, hotels with P17.3-billion Ayala deal

Insider Spotlight

• AREIT is growing into a P177-billion property portfolio, with four malls and two hotels joining its office-heavy asset base.
• Retail and hospitality will reach a record 41 percent of AREIT’s portfolio, giving the REIT greater exposure to consumer spending and hotel revenues.
• The P17.3-billion deal still has a long runway, with SEC approval targeted by end-2026 and the additional share listing process stretching into 2028.

AREIT Inc. is set to grow into a P177-billion property giant spanning offices, malls and hotels after shareholders approved a P17.3-billion infusion of six Ayala Land Inc. properties.

The deal adds more than 300,000 square meters (sqm) of gross leasable space across four malls and two hotels, pushing retail and hospitality to a record 41 percent of AREIT’s portfolio as it expands beyond its traditional office base.

The transaction is expected to secure Securities and Exchange Commission approval by end-2026, although the process will stretch into 2028, when AREIT targets applying to list the new shares on the Philippine Stock Exchange.

Alberto de Larrazabal

AREIT president, CEO 

Management’s view

“These infusions strengthen AREIT’s scale and diversify our portfolio across offices, retail and hospitality, while introducing lease structures that allow us to participate more directly in the operating performance of these assets,” AREIT president and CEO Alberto de Larrazabal said in a statement on Thursday. 

“This gives AREIT additional avenues for sustainable growth while strengthening the quality and recurring income base of the portfolio,” he added.

Six big Ayala properties join the fold

• Glorietta 4 — 30,429 sqm in Ayala Center, Makati
• Ayala Malls Capitol Central — 63,391 sqm in Bacolod City
• Ayala Malls Circuit — 65,184 sqm in Circuit Makati
• Ayala Malls Cloverleaf — 33,277 sqm in Balintawak, Quezon City
• New World Makati Hotel — 578 rooms and 72,488 sqm
• Seda Vertis North — 438 rooms and 35,478 sqm in Quezon City

The malls will operate under direct leases, while the two hotels will have hybrid master leases combining fixed rent with a variable component tied to hotel revenues, giving AREIT more upside when the properties perform better.

Ayala gets P17.3 billion in shares

Ayala Land and its subsidiaries will receive 462.5 million new AREIT shares at P37.48 apiece in exchange for the properties, with the transaction still requiring regulatory approval.

AREIT expects the infusion to increase distributable income and support dividend growth, with income from the six properties accruing once the Securities and Exchange Commission approves the transaction.

—Edited by Miguel R. Camus